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5. On December 1, 2005, the US Treasury issued a 2-year coupon bond with a coupon rate of 5% that pays coupons semi-annually (on June
5. On December 1, 2005, the US Treasury issued a 2-year coupon bond with a coupon rate of 5% that pays coupons semi-annually (on June 1 and December 1). a. If the yield to maturity of this bond when it was issued was 6% (stated as an APR with k=2), what was the price per $100 of face value when it was issued? b. What should be the market price per $100 face value of the bond from part c) on June 2, 2007 (just after the third coupon payment was made)? Use the information below for the Treasury yield curve on June 2, 2007. Note that yields listed below are stated as APRS (k=2). Maturity 3-month 6- month 1-year 2-year 5-year Yield to Maturity (APR) 3.50% 4.00% 4.50% 5.00% 6.00%
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